(7 July 2011) International financial troubles are ongoing, and Latin America must take precautions to avoid a new crisis affecting its economic and social stability. This was according to the Ecuadorian economist Pedro Paéz, speaking today at a lecture given at the ECLAC headquarters in Santiago, Chile.
The current Chair of the Ecuadorian Technical Commission for the Creation of the New Regional Financial Architecture - Banco del Sur gave a presentation entitled "The new regional financial architecture. The structural crisis and the future of Latin America", in front of an audience of academics, international experts and diplomats.
The renowned expert was received by Raúl García-Buchaca, Officer in Charge of ECLAC in the absence of its Executive Secretary Alicia Bárcena, and by the Ecuadorian Ambassador in Chile, Francisco Borja Cevallos.
According to García-Buchaca "ECLAC has been debating this issue for years, following the 1997 Asian crisis. The Commission's studies have proposed countercyclical policies, structural fiscal rules, prudential macro measures and financing for development".
In his presentation, Páez provided a full analysis of the current worldwide economic and financial situation, and explained that we are experiencing a genuine "structural crisis', which has become the new norm within the capitalist system.
He declared that "there is a problem of structural insolvency. Today's debt is ten times larger than world GDP. The real economy is out of proportion with debt, and this is causing major global imbalances".
In the light of this, he stressed the need to seek different local or regional responses within globalization, especially in Latin America, so as to find an effective response to the region's needs.
In this context, he mentioned that the proposed new regional financial architecture may help to achieve this objective. This new architecture is based on three pillars: new development banking, represented by Banco del Sur; a payment compensation system; and a financial security system based around interconnected central banks.
He added that a development fund (Southern Fund) and the use of a fiduciary currency (such as the Sucre used in Ecuador, Plurinational State of Bolivia, Bolivarian Republic of Venezuela and Cuba), could be used to boost this new architecture.
He went on to say "We need to generate a far-reaching and responsible debate on the role of development banks at the national, regional and international levels.... The new regional financial architecture would provide us with a wide and long-term horizon and offer our countries new possibilities for integration".
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